October 2013

Ideas and evidence for marketing people

www.warc.com/admap October 2013

The Future of Shopper Marketing

The
Future of
Shopper
Marketing

The Mobile Shopsumer

10 Steps To Shopper-Centricity
The Psychology Of Shopping
Music In Advertising
Content Marketing
Case Study: Pantene China
Efficient Frequency Management
10 Trends In Latin America
Apples Long-Form Advertising

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DIGITAL MARKETING

42

Efficient frequency
management
Bad practice in
frequency management
is limiting digital
advertising effectiveness
and studies involving
major international
brands show how
and where digital
advertising budget is
being wasted
By Mark Connolly, AudienceScience

t seems that with digital advertising,

we have finally found a medium that
offers real accountability, with targeting
capabilities that make it possible to
achieve the advertising Holy Grail:
reaching the right person at the right time
with the right offer. So, its no surprise that
spend on digital display advertising in the UK
rose 12.4% year-on-year to 1.3 billion in
2012 (PwC/IAB).
However, so much of digital advertising
today leaves much to be desired. Only by
recognising the flaws in current practices
and making significant changes in the way it is
bought, can advertisers fulfil the promise of
digital and improve their RoI.
At AudienceScience, we found that brands
are wasting a significant proportion of that
budget, with less than half directly reaching
the right person the intended number
of times in the right place. We call the
percentage of the budget that meets these
requirements the Productive Media Quotient

(PMQ). For CMOs this is a huge issue;

being able to recoup these losses can mean
effectively doubling their advertising budget
at no extra cost.
But it can be hard to identify where the
losses are being made, as there is a real lack
of transparency within the buying ecosystem.
CMOs are finding it hard to see how much
of their digital advertising budget has been
spent, where it has gone and why.
Because researching and buying digital
advertising is a compartmentalised process,
there are silos for managing data, defining
audience segments, planning and purchasing
media. But, even worse, each digital
advertising partner within the complex buying
ecosystem (e.g. data providers, agencies, ad
networks, trading desks etc) will require its
own fees and perverse incentives, and as data
is transferred between partners there is a
loss in translation and data quality diminishes.
Most significantly, the responsibility of
managing campaign standards such as
frequency, targeting and viewability are left to
the most siloed players of all, publishers, at

the far end of the chain from the advertiser

and their budget.
IDENTIFYING WASTAGE
We carried out two in-depth studies with
major international brands to understand
how and where digital advertising budget is
being wasted.
The first study was with one of the
worlds biggest brand advertisers. A static
pixel was added to each of its campaigns,
making it possible to track exactly where the
ads were going. We could identify that the
vast majority of digital advertising budgets go
to fees and waste, not reaching consumers,
with 5-8 million being wasted in every 10
million spent on this channel.
Figure 1 shows the type and percentage of
waste we found, with problem areas including
out-of-target impressions, poor frequency
management and arbitrage costs (network
or technology vendor buying media at a low
cost and then selling it back to the advertiser
at a higher price).

FIGURE 1
Everyone wants a piece of your media budget pie

Frequency
inaccuracies
31%

PMQ
24%

DMP fee
3%

Out of
target
impressions
12%

Arbitrage
and network
margins
10%

Agency fees
7%

DSP fees
13%
A DMAP OC TOBER 2013

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DIGITAL MARKETING

THE PROBLEM WITH FREQUENCY

MANAGEMENT
We did further analysis into frequency as it
was clear this was one of the biggest problem
areas, with over-frequency impressions
accounting for more than 75% of all ad
impressions in some cases. Frequency
capping allows advertisers to set the amount
of ad exposures allowed to any single user
over a period of time for a campaign. But
our research shows most brands are doing a
poor job managing frequency (serving up the
same ad too many times to one user starts
to feel like stalking) and also wastes money.
The key to frequency management is to
reach the user enough times to have impact
but not to annoy them.
We examined six typical campaigns run
in Q4 2012 by global advertisers. As with
the first study, each campaign contained our
static pixels. In order to create laboratory
conditions every campaign was bought in
the usual way with the agencies representing
these advertisers purchasing the campaigns
on a standard insertion order basis. All
campaigns ran on inventory fulfilled via major
ad exchanges and all ran with a frequency
cap of 30 impressions. For all campaigns
the agencies (and their clients) reported
satisfaction with campaign performance and
paid in full. So what did we discover?
The first finding was that over-frequency
impressions are the norm, not the exception.
As can be seen in Figure 2, none of the
campaigns studied delivered more than 40%
of its impressions within the frequency cap.
This meant these advertisers spent over
2.5 times more than they should where
a reported CPM (cost-per-view) of 1.61
was recalculated to only count in-frequency
impressions, CPM rose to 4.66.
INDIVIDUAL PUBLISHER
CHALLENGES
While campaigns typically run across multiple
publishers with overlapping audiences,
even individual publishers can create waste
through over-frequency. In the case that an
individual publisher goes over a campaigns
frequency cap, campaign management
practices, not technology limitations, are the
culprit. While publishers have the technical
capability to control frequency on their own
sites and many do effectively individual
publishers do on occasion compromise

43

FIGURE 2
% of impressions delivered in-frequency cap of 30
Average frequency
11.0
36%

10.8

12.6
37%

9.1

16.0

38%

40%

Healthcare

Lottery

38%

19.1
24%

Auto

CPG

Financial
services

frequency caps in order to deliver campaigns.

Is this simply a matter of publishers acting
in bad faith? Hardly. Rather, the removal of
frequency caps is typically the consequence
of multiple competing parameters around
the campaign. Does the campaign require
tight targeting, high quality, above-the-fold
placements, and a full delivery of budget?
Publisher inventory limitations mean that
frequency is often sacrificed in order to
ensure full delivery of budget. This is not only
due to publishers own selfish motivations
(spend campaign budget as quickly as possible
so they can recognise revenue) but also the
result of consistent pressure from agencies
and marketers to ensure every pound is
spent, often with too little focus on how that
may impact effectiveness.
CROSS-PUBLISHER CHALLENGES
While more assertive campaign management
can help to solve individual publisher issues,
this has no bearing on solving cross-publisher
issues. In fact, capping across publishers
is impossible using conventional digital ad
management technology.
The first problem is that publishers cant
see impressions delivered by other publishers
so frequency of one campaign across several
publishers cant be co-ordinated at the
publisher level.
Secondly, conventional ad servers report
on cross-publisher frequency for campaigns,
but rely on reporting averages. The basic
arithmetic behind calculating averages means
relying on these numbers can be deceiving.
The reality is that fringe users get the vast

Travel

majority of impressions. The top 1% of

users by frequency received a substantial
percentage of all campaign impressions.
Whats worse, many of these users were
found not to be real people; they were
web bots.
Our findings confirm that CMOs for major
brands are wasting a significant proportion
of their digital advertising budget, with
poor frequency management being a major
contributor. Advertisers must recognise
that publishers cannot do the impossible
and manage frequency across publishers.
Smarter planning alone cant do this. New
technology is required. And technologies
exist which allow marketers to target,
execute and manage digital advertising from
one integrated digital platform, controlling
for frequency across all publisher partners
and inventory providers. It also provides a
transparent view of digital media spend, while
making it possible to manage international
digital advertising buying to reach the target
audience with true frequency capping.
But the way CMOs buy their advertising
needs to change, to focus on outcomes,
not outputs, with flat licensing fees
rather than percentage-of-media pricing
that encourages inefficiency and rewards
publishers for high volume. Otherwise, it
will remain in the interest of buying partners
for the digital advertising model to stay as it
is and budget wastage will continue to limit
RoI for advertisers.
more on digital
marketing at
www.warc.com

ADMAP O CT O BER 2013

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